Sen. Carl Levin spent the morning lashing into former banking regulators who were supposed to have prevented Washington Mutual’s spectacular 2008 failure, which was the largest-ever bank collapse. It’s now clear both the bank and federal regulators knew the subprime loans that triggered that collapse were at best shoddy and in many cases fraudulent. What also ought to be clear is how utterly inadequate the current regulatory structure is for protecting consumers and how destructive that regulatory failure is to the global economy.

Levin’s particularly incensed about the Office of Thrift Supervision’s effort to keep FDIC Chair Sheila Bair out of the regulatory conversation. Bair was among a few, lone voices in the regulatory world who advocated a tough line against the banks. Levin called OTS’ position, on the other hand, “feeble.” He dug up emails in which OTS worked aggressively to keep Bair on the sidelines, including one in which OTS chief John Reich declared, “I cannot believe the continuing audacity of this woman.”

Levin’s chairing a investigative panel into how WaMu failed and how regulators dropped the ball. Earlier this week, the Senate panel’s investigation found that WaMu’s executives knew of rampant fraud in the bank’s massive subprime lending operation, including falsifying documents and steering borrowers to high-cost loans.

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